Headed for the Supreme Court: Do Auction Sales Contracts Require a Three-Day Attorney Review Provision?

Sullivan v. Max Spann Real Estate & Auction Co., ___ N.J. Super. ___ (App. Div. 2020). As Judge Firko stated in the first sentence of her opinion in this case, this was an appeal “from a July 22, 2019, order entering judgment finding that real estate auction sales contracts prepared by attorneys, licensed real estate brokers or salespersons, need not contain the three-day attorney review clause mandated by N.J. State Bar Ass’n v. N.J. Ass’n of Realtor Boards, 93 N.J. 470 (1983), and codified in N.J.A.C. 11:5-6.2(g), when a blank, pre-printed contract is sent to a bidder prior to the auction of a single family home and recommends an attorney review the contract.” The appeal produced a 2-1 decision.

The majority (Judges Firko and Whipple) affirmed the decision of the Law Division, applying plenary review of the legal issue presented. The majority held that “a private real estate auction sale is not the consumer type contract contemplated in N.J. State Bar Ass’n, and therefore, the three-day attorney review period is not required in such a sale.”

Judge Fuentes dissented, contending that the Supreme Court’s 1983 decision did not expressly except auction contracts from the three-day attorney review mandate. Thus, he believed that the panel was obligated to enforce that mandate, leaving it to the Supreme Court to alter its prior decision if it chose to do so.

The dissent enables an appeal as of right to the Supreme Court, which would clarify the issue. Expect such an appeal to be forthcoming.